The School Accounting System can be set up to operate on an accrual basis. The accrual basis of accounting recognizes an expense as soon as the expenditure is incurred rather than when paid, and recognizes revenue at the time the sale of goods and services is made, even if payment was not received at that time.
When operating the Accounts Payable module on an accrual basis, the system credits the liability (Accounts Payable account) for the invoice detail and debits the expense account at the time the invoice is posted. Then when the checks are written and updated, the system debits the Accounts Payable account to release the liability and credits the cash account. The basis for how to operate the Accounts Payable module is set within the System File in the Accounting Basis field.
When operating the Accounts Receivable module on an accrual basis, the system credits the revenue account and debits the Accounts Receivable account at the time the invoice (for the charge from the sale) is posted. Then when the payment is received (entered and posted), the system credits the Accounts Receivable account and debits the cash account. The basis for how to operate the Accounts Receivable module is set within the Accounts Receivable System File in the Post to General Ledger field.
Tip: Most school districts operate on a cash basis. Then at the fiscal year end, the necessary accrual adjustments are made to comply with Generally Accepted Accounting Principles (GAAP), if required to do so by the state.